Duncan calls for ‘reality check’ on DHS headquarters project

A new report about the ongoing delays in construction of the Homeland Security Department’s new headquarters has prompted one lawmaker to question whether it still makes sense to build the facility at the St. Elizabeths campus in Southwest D.C.

Rep. Jeff Duncan (R-S.C.), the chairman of the Homeland Security Committee’s Subcommittee on Oversight and Management Efficiency, last week released a majority staff report with the title “Reality Check Needed: Rising Costs and Delays in Construction of New DHS Headquarters at St. Elizabeths.”

“With our nation $17 trillion in debt, we cannot afford waste and frivolous spending,” Duncan said, in a statement. “The [Committee on Homeland Security] Oversight and Management Efficiency Subcommittee that I chair is responsible for overseeing DHS to help ensure efficient and effective operations. While touring the St. Elizabeths site in March 2013, I was struck by how taxpayer dollars had been spent thus far. Most Americans would be surprised to see the dilapidated historic buildings that are now undergoing extensive renovation for DHS’s headquarters.”

The report calls into question the planning process that went into choosing St. Elizabeths and whether economic conditions have changed so much since the project began that St. Elizabeths is no long the best option for DHS.

The DHS National Capital Region Housing Master Plan in October 2006 changed the Coast Guard headquarters project into a consolidated headquarters project for DHS. The General Services Administration scheduled construction to begin in fiscal year 2007. The Coast Guard was expected to move into its new headquarters at the end of FY 2010 through the start of FY 2011. The construction of DHS’ consolidated headquarters would be finished at the end of FY 2014, with final occupancy wrapped up by FY 2015.

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The economic downturn that began in 2007 had a negative fiscal impact on funding for St. Elizabeths construction. According to the report, both GSA and DHS received less than their original appropriations requests. This forced the agencies to adjust the project costs and completion dates.

“When it was originally proposed and approved, the St. Elizabeths project had a price tag of $3.45 billion; however, in the Department’s most recent update on the project, DHS and GSA submitted cost projections of $4.5 billion with a completion date of 2026,” the report says. “DHS contends that cost savings could have been maximized by using the original approach of coordinating construction efforts across the St. Elizabeths campus, but the current fiscal environment has not allowed for this. In 2012, Obama Administration officials indicated that the coordinated construction plan was no longer feasible, and chose to implement a segmented construction plan.”

Most of the project funding to date came in FY 2009 with supplemental funds from the American Recovery and Reinvestment Act. This funding combined with DHS and GSA’s regular appropriated funding provided $1.1 billion, which was applied to phase one of the project — construction on Coast Guard headquarters. Since FY 2009, though, appropriations for the two agencies has been less than the administration’s request for the St. Elizabeth project.

“Knowing that the fiscal climate is substantially different now than it was at the project’s beginning in 2006, it is worth questioning whether the consolidation project should continue at its current pace or be restructured,” the staff report says. “In September 2013, the Government Accountability Office (GAO) reported that DHS did not have a process to systematically prioritize its major investments to ensure that the Department’s acquisition portfolio was consistent with anticipated resource constraints. The GAO added that this approach hinders efforts to achieve a balanced mix of programs that are affordable and feasible and that provide the greatest return on investment.”

DHS’ current headquarters occupies 7 million square feet of office space spread out over 53 locations within the National Capital area. Most of the department’s leases are due to run out in 2016, 10 years short of St. Elizabeths’ new completion date.

“Currently, DHS is signing short term leases on its office spaces throughout the National Capital Region,” the staff report says, referencing a Congressional Research Service study. “As DHS’s leases have matured, the Department added short term extensions into the leases so that they can move to new facilities like St. Elizabeths or to a different consolidated leased office space. However, short term leases are much more expensive than longer term leases.”

The Coast Guard finished moving into its new facility at St. Elizabeths in November 2013.

DHS considered many factors when deciding where its new headquarters would be located, including whether there was sufficient available space for offices and parking, proximity to the White House and Congress, accessibility to public transportation and major roadways and amenities nearby for personnel to walk to.

In 2006, DHS determined that it would need a minimum of 4.5 million gross square feet to house its new, secured campus headquarters.

“It remains unclear what metrics DHS used to determine what critical functions needed to be collocated on a secured campus and how this determined the 4.5 million gross square feet number in 2006,” the report says. “Whether DHS still requires a minimum of 4.5 million gross square feet of secure space in the National Capital Region seven years after the October 2006 Housing Master Plan remains an unknown.”

The report pointed to improvements in telecommunications and the successful implementation of telework at other agencies as new factors to be considered in determining whether DHS still needed the space it thought it did in 2006 for its headquarters.

In a March 20, 2013, the subcommittee sent a letter to Comptroller General of the United States Gene Dodaro requesting that GAO look into the current cost and schedule estimates from DHS compared to cost estimating best practices.

The letter also asked GAO, among other things, to examine to what extent DHS’ decisions in the headquarters project were based on cost effectiveness and whether the department’s analysis of consolidating its headquarters at St. Elizabeth was sound.